FOUNDATION SERIES FOR FAMILY OFFICES · No. 4 of 5
Why European Venture — and Why Fintech Within It?
This is the fourth article in our series aiming at providing venture intelligence to family offices. The first three articles can be found here, here and here. Arguably this article is aimed and can be useful to all types of investors, not only family offices. We try to convey the attractiveness of European venture and fintech more specifically.
Cheaper entry, recently the better returns, a matured ecosystem, and a sector that has become a matter of European sovereignty.
Pascal Bouvier, MiddleGame Ventures · June 2026
You have decided that venture belongs in the portfolio, that funds are the core, and how to size and pace the programme. The remaining question is where to point the capital. The honest answer for a family office is not “everywhere venture happens” — it is wherever the asymmetry is best: where you pay the least for outcomes that have actually delivered, in a market not yet crowded with the capital chasing them. We believe that place is European venture, and within it, fintech. What follows is the case, stated plainly, with the objections met rather than dodged.
The European case: cheaper entry, and recently the better returns
Begin with the asymmetry, because it is the spine of the argument. European companies routinely raise at a meaningful discount to comparable U.S. peers — often 20–40% lower at the seed stage — even though Europe attracts only around a tenth of global venture dollars, against roughly 70% for the United States and Canada.[1] Less capital chasing the same quality of company means lower entry prices and less competition for ownership. On its own that would merely be interesting. What makes it compelling is that the returns have followed: European venture funds outperformed their U.S. counterparts in almost every quarter since the 2022 downturn, with one-year IRRs running near 44% against about 29% in the U.S. at the turn — in good part because lower European entry valuations had less distance to fall when the market corrected, while late-stage U.S. valuations kept inflating.[2] Over the longer arc the same holds: the 2025 State of European Tech report finds European venture has outperformed U.S. funds over the past decade and beaten European public markets by roughly ten points, across an ecosystem now worth close to $4 trillion.[3] U.S. momentum has picked up again more recently, so I would frame this as an entry-point advantage to seize rather than a permanent law of nature. But cheaper entry into an asset class that has, in fact, out-returned the alternative is the definition of an asymmetry worth owning.
The exit question, answered honestly
The fair knock on Europe has always been exits — historically fewer and smaller than America’s, and slower to arrive. I will not wave that away, because it is the one variable that genuinely matters to a realized return. But the picture has changed: Europe has produced a generation of real outcomes, from Adyen and Spotify to Wise and ARM, and is building a deep bench of global fintech franchises in Revolut, Klarna and others. That bench is no longer hypothetical: Klarna listed on the NYSE in September 2025 — the debut that broke the fintech IPO drought — and Revolut’s November 2025 share sale valued it at $75 billion on $4 billion of revenue and $1.4 billion of pre-tax profit, with 2026 secondary sales reported near $115 billion.[4] The sector-wide exit machinery has restarted too: fintech IPOs rose 50% in 2025 to 42, M&A volumes more than doubled from 2023 to $251 billion, and — a telling reversal — scaled fintechs out-acquired banks and incumbents for the first time on record outside 2023.[5] The exit environment is the thing to watch, not the thing to fear — and it is precisely why the choice of manager matters so much, because realizing European outcomes takes patience, relationships and discipline the median firm does not have. That is the subject of the final piece in this series.
The ecosystem has grown up
Much of the old skepticism about European venture rested on premises that have quietly stopped being true. The first was talent: that Europe’s best engineers and founders inevitably left for the United States. The drain has narrowed rather than vanished — senior AI researchers are still courted hard by American labs — but the direction has shifted. Today 81% of European AI founders choose to build on the continent, up from 74% a decade ago, and 42% of founders say Europe is a more attractive place to start a company than it was a year ago, against just 19% who say less.[6] The quality of the engineering and founding talent now rivals anywhere; the difference is that more of it stays.
The second premise was amateurism — that Europe lacked the operating know-how that makes Silicon Valley compound. That, too, has dated. A decade ago Europe had perhaps 13,000 funded technology companies; today it has roughly 40,000, built by a thickening bench of repeat founders, experienced operators and angels who have done it before and now teach the next cohort how. Best practices that had to be imported in 2015 — option pools, governance, go-to-market discipline, how to run a board — are now native. The ecosystem has professionalized, and a professional ecosystem is one an outside allocator can underwrite with far more confidence than a cottage industry.
Sovereignty is now policy
The most important recent change is not in the market but in the politics around it. In September 2024 Mario Draghi handed the Commission a blunt diagnosis: the EU’s productivity gap with the United States is, in his words, “largely explained by the tech sector” Europe does not have. His report — 383 proposals, a call for roughly €800 billion of additional annual investment, an explicit end to small-state timidity in favour of active industrial policy — has reframed Europe’s posture from regulating technology to owning it, across AI, compute and cloud, deep tech, space and defence.[7] That awakening matters to a venture investor because it turns public will, and public capital, into a tailwind behind exactly the companies we back.
Fintech sits squarely inside this, because the financing engine Draghi prescribes is itself a financial-infrastructure project. The Savings and Investments Union, launched in 2025 as successor to the Capital Markets Union, aims to channel some €35 trillion of European household savings — much of it idle in low-yield deposits — into European companies, and its December 2025 market-integration package is built explicitly for tokenized securities and digital money.[8]Financial sovereignty — over payments, settlement, market infrastructure and the money rails themselves — has become an EU priority, and it is a priority that wants new entrants rather than fearing them. When the state decides a sector is strategic and puts capital and rule-making behind it, the venture investor positioned early in that sector is no longer leaning against policy. They are leaning with it.
Why fintech within Europe
If Europe is the right geography, fintech is the right sector within it — and not by sentiment. Fintech has become Europe’s most resilient technology sector, rising from roughly 18% of venture deal value in 2024 to around a quarter in 2025, and it is where the continent has repeatedly built genuinely global companies.[9] The sector’s underpinnings have turned as well: global fintech revenues passed half a trillion dollars in 2025, growing 22% — more than four times faster than incumbent financial institutions — with 74% of the largest public fintechs now profitable; yet fintech still captures only about 4% of the global financial-services revenue pool, which is why credible forecasts see revenues roughly tripling by 2030.[10] The capital, meanwhile, has not caught up with the fundamentals: H1 2026 recorded the lowest European fintech deal count in over a decade — uncomfortable for the sector’s headline writers, rather agreeable for a disciplined buyer of early-stage ownership — with what funding remains concentrating in AI-native companies.[11] We are not alone in reading it this way: the specialist funds raised on precisely this thesis describe European fintech as “entering a golden period”.[12] Two structural forces, specific to Europe, explain why we concentrate here.
Regulation as a tailwind, not a tax. Europe writes the financial rulebooks the rest of the world ends up copying, and each one does two things at once: it imposes a compliance cost incumbents experience as a burden, and it defines a surface of newly licensable activity that well-built startups experience as a market created on a fixed date. The current stack is unusually dense and mutually reinforcing — MiCA, the first comprehensive crypto-asset regime, in force since the end of 2024; DORA on operational resilience, applicable since January 2025; PSD3 and the Payment Services Regulation, agreed in late 2025 and landing in 2026; FIDA, extending open banking into full open finance; the Instant Payments Regulation; the long-standing MiFID II and MiFIR market framework, now being pulled toward EU-level supervision and technological neutrality for tokenized securities under the 2025 market-integration package; and the EU AI Act phasing in alongside.[13] Read together, these are not isolated rules but the deliberate construction of a single, digital, integrated European capital market. Europe’s regulatory density is usually called a handicap. In fintech it is the opposite: it forces clarity, and clarity is what lets a regulated, defensible, licensable business be built at all. The moat and the market arrive in the same statute.
The Onchain convergence. Beneath the rulebooks, three forces are converging to rebuild financial services from the rails up — digital wallets, artificial intelligence, and tokenization — toward what we call an Onchain future, in which assets, identities and transactions become intelligent, modular and purely digital. This is not a thesis waiting for evidence. Stablecoins have grown from about $28 billion in 2020 to roughly $300 billion today, settling some $33 trillion in transactions in 2025 alone; tokenized real-world assets passed $30 billion this year, with credible forecasts toward $2 trillion by 2030.[14] Money itself is being re-platformed, and Europe — with MiCA giving stablecoins and tokenized assets a legal home, and a payments and market framework being rewritten in parallel — is unusually well placed to build the regulated, institutional version of that future rather than the offshore one. That is the ground we invest on.
Why seed to Series B
Geography and sector still leave the question of stage, and our answer is the early one: seed through Series B, with first cheques between roughly €500,000 and €5 million. This is where the European discount is widest, where ownership is still affordable, and where the craft we described earlier — selection in a protected, specialist territory — actually decides outcomes, before the late-stage crowd and the mega-platforms arrive to bid prices up. Later rounds are more efficient, more crowded and more about cheque size than insight. The asymmetry lives early, in the rounds where knowing which compliance-automation pitch is a real business and which is a wrapper is worth more than any amount of capital. That is the part a machine cannot rent and a generalist cannot fake.
What this means in practice
European venture, fintech within it, and the early stage within that, is not a hedge against the United States. It is a distinct and under-owned entry into a sector being rebuilt — bought at a discount, into a maturing exit environment, on a professionalized talent base, with the full weight of European sovereignty policy now behind it. It is, in short, exactly the kind of asymmetry a family office with permanent capital and a generational horizon is built to own. But an asymmetry only pays if you back the right manager, because in a power-law business decided by specialist selection, the distance between the top firms and the median is enormous. How to tell one from the other is where this series ends.
Next in the series: “How to Choose a Venture Manager.”
[1]European companies routinely raise at material discounts to comparable U.S. peers — commonly 20–40% lower at seed — even as Europe attracts only around a tenth of global venture dollars against roughly 70% for the U.S. and Canada (H1 2025). See Development Corporate, “European VC Valuations 2025.”
[2]European VC funds outperformed their U.S. counterparts in almost every quarter since the 2022 downturn — one-year IRRs ran near 44% versus about 29% in the U.S. in early 2022 — partly because lower European entry valuations had less far to fall; late-stage median valuations rose 43% in the U.S. but fell 2.8% in Europe from 2023 to H1 2024. U.S. momentum has since recovered, so this is an entry-point advantage, not a permanent law. See PitchBook, “European VC returns outpace US.”
[3]Atomico, State of European Tech 2025: Europe’s tech sector is worth nearly $4 trillion (about 15% of GDP) across roughly 40,000 funded companies, up from 13,000 in 2016; a record 27,000+ founders started companies in 2025; and the report finds European venture has outperformed U.S. venture funds over the past decade while beating European public markets by some ten points. See Sifted and Invest Europe.
[4]Klarna listed on the NYSE on 10 September 2025 at $40 per share (a roughly $15bn valuation), closing its first day up about 15%. Revolut completed a share sale at a $75bn valuation in November 2025, on 2024 revenue of $4.0bn (up 72%) and pre-tax profit of $1.4bn (up 149%); 2026 employee share sales were reported at a $115bn valuation. See Forbes, Revolut and Sifted.
[5]BCG & FT Partners, Global Fintech Report 2026: From Recovery to Resurgence (June 2026): fintech IPOs rose 50% year-over-year to 42 in 2025; fintech M&A volumes grew from $105bn (2023) to $184bn (2024) to $251bn (2025); scaled fintechs completed 659 acquisitions in 2025 versus 589 by banks and incumbents. See BCG.
[6]State of European Tech 2025: 81% of European AI founders now stay in Europe (up from 74% in 2016); 42% of founders say Europe is a more attractive place to build than a year ago, against 19% who say less; the funded-company base has grown from ~13,000 (2016) to ~40,000. The senior-talent brain drain has narrowed, not vanished. See State of European Tech 2025 summary.
[7]Mario Draghi, The Future of European Competitiveness (September 2024): the EU–U.S. productivity gap is “largely explained by the tech sector”; 383 proposals; a call for roughly €800bn a year (4–5% of GDP); technological sovereignty across AI, compute/cloud, deep tech and defence; the basis for the EU Cloud and AI Development Act. See TechPolicy.Press and the European Commission.
[8]The Savings and Investments Union (2025, successor to the Capital Markets Union) aims to channel roughly €35 trillion of EU household savings into European companies; the Commission’s December 2025 Market Integration Package builds explicitly for tokenized securities and digital money and pulls trading-venue supervision toward ESMA. See DLA Piper, “EU Capital Markets Overhaul.”
[9]Fintech has become Europe’s most resilient tech sector, rising from about 18% of deal value in 2024 to roughly a quarter in 2025. See Tech.eu / Finch Capital, “State of European Fintech 2025.”
[10]BCG & FT Partners (June 2026): global fintech revenues reached $504bn in 2025, up 22% — more than four times incumbent growth; 74% of the largest public fintechs are profitable, with average EBITDA margins up 400bps to 20%; equity funding rose 53% to $58bn; fintech accounts for roughly 4% of the global financial-services revenue pool. McKinsey (2023) projects fintech revenues growing about three times faster than traditional banking, to over $400bn by 2028; BCG & QED Investors (2023) project roughly $1.5tn by 2030. See BCG, McKinsey and BCG/QED.
[11]Sifted, “European fintech’s H1 funding figures” (21 July 2026): H1 2026 recorded 250 fintech deals in Europe, the lowest half-year count since H2 2014, with funding concentrating in AI-native fintechs (“If you’re not AI-native, you’re not getting funded”). See Sifted.
[12]Michael McFadgen, partner at 13books Capital, on the close of its £121m (€144m) fintech-dedicated Fund II, backed by British Patient Capital: “We believe European fintech is entering a golden period.” See Silicon Canals and UKTN (July 2024).
[13]Regulatory status: MiCA fully in force since 30 December 2024; DORA applicable since January 2025; PSD3 and the Payment Services Regulation agreed by EU negotiators in November 2025, entering into force in 2026; FIDA advancing open finance; the Instant Payments Regulation and the EU AI Act phasing in. See Powens, “EU Fintech Regulations 2026,” and Norton Rose Fulbright.
[14]Stablecoins grew from roughly $28bn (2020) to about $300bn in 2025, settling some $33 trillion in transactions during 2025 (up from $5.7tn in 2024); Citi’s base case projects ~$1.9tn by 2030. Tokenized real-world assets passed roughly $30bn in 2025, with forecasts toward $2tn by 2030. See Visual Capitalist and InvestaX.
